Commentary on Economics, Information and Human Action

Overfishing conference at PERC

Jonathan Adler reports from a PERC workshop on fisheries management and how property rights institutions can reduce pervasive overfishing problems in fishing. Overfishing is a serious environmental and economic problem, and Jon provides excellent links to the body of research showing that property rights institutions, such as tradeable catch shares, can reduce overfishing and improve the long-run sustainability of both the fish populations and fishing profits in the industry.

I can’t stress how important this is. For example, overfishing has brought the Atlantic bluefin tuna to the brink of extinction, and despite the prospects of losing this species and the future stream of profits from fishing it if it were to survive, the industry has failed to self-organize and have continued to overexploit the common-pool resource. How they can place so much weight on current profits and so little weight on the loss of future profits is a mystery to me. But if they can’t self-organize to agree to catch shares they will be subject to regulation, which if done right will be a system of catch shares.

Political opposition to rights-based fishery management is a timely concern. Although rights-based management systems have been successfully adopted in several U.S. fisheries, as they have in other parts of the world, they are under threat. Earlier this year, Reps. Barney Frank (D-MA) and Walter Jones (R-NC) pushed successfully for an appropriations rider prohibiting the National Oceanographic and Atmospheric Administration (NOAA) from spending money implementing additional rights-based reforms in U.S. fisheries. Rep. Jones, in particular, is on the warpath against rights-based management – which is a shame as rights-based fishery management is about as market-oriented environmental policy as there is. (Indeed, even the folks at CAP recognize the value of rights-based fishery reforms.)

Opposition to catch shares is environmentally indefensible and economically foolish. Any program than can simultaneously increase the environmental sustainability and economic efficiency of a natural resource should be a no-brainer. It would also be good for the federal budget. A recent study in the Journal of Sustainable Development estimated the widespread adoption of rights-based fishery management could reduce the deficit by as much as $1.2 billion.

Here’s an area where the long-term economic and environmental interests coincide, but are being stymied by backward-looking and short-term economic and political interests.

7 thoughts on “Overfishing conference at PERC”

Why would *successful* incumbents be opposed? Are shares being allocated evenly among participants? Are they worried that their “shadow” wealth will be held to the light? They have the most to gain from shares (and lose from a fisheries collapse).

Lynne, in NE there is an underfishing problem, and the fleet has come nowhere close to TAC, the Total Allowable Catch in almost twenty years, leaving behind massive ammounts of extra fish to spawn and rebuild.http://www.fishnet-usa.com/chronic_underfishing.htm
Catch shares are an economic tool, not a conservation tool.
Catch Shares saves not one single fish.
Why would NOAA remove almost $100 million from research to implement Catch Shares?
That would be one reason for the bi partisan coalition to fight catch shares.

Although many people see the win-win between environmental and economic sustainability, catch shares are opposed by interests like processors and fish buyers that are protecting their investments at the expense of sustainable fishing, fishermen, ports and communities. These interests have built their businesses based on the market gluts that occur under conventional management which often restrict fishing to short seasons. Catch shares gives fishermen many more options, such as year-round seasons.

Catch shares often force every player in the fishery – fishermen, processors, fish buyers, ports, and even restaurants – to create new relationships and business plans. Why would the few people making money under conventional management want to do that? Well, they don’t, and they’re fighting catch shares tooth and nail, even if that means dragging everyone and the fishery down with them.

The corporate winners, and the processors that can now buy quota just love it!
They can now man their boats with foreign labor, pay them a weekly wage, and really clean up.
You talk to anyone that got rooked out of their right, and ask them how they feel about it.
I guess TAC had nothing to do with rebuilding NE fish stocks, eh?
The only ones that want this are the scavengers looking to profit from investment strategies.
And the greedy that want it all to themselves.
How can someone that wants to bust their rump, buy a boat, and compete to live the American Dream?
As you just pass your ownership down through the following generations of your family.
Just like the Kings Noblemen.Granted rites.

This BS started years ago, a front for usurping publicly held natural resources for private capital fun and profit. Information can be found at http://www.perc.org , Property and Environment Research Center, a “think tank” located in Bozeman, Montana, which proclaims itself as having …“championed the successful approach [ITQ’s] to eliminating overfishing (see http://www.ifqsforfisheries.org).”

Go to http://www.perc.org/staff.php and see on his bio page Terry L. Anderson’s (Exec Dir of PERC, an economist) publications including one of my favorites: “Saving wild tigers could mean eating them”. (move over Monty Python). In this piece of ecological brilliance he proposes that we should farm and eat tigers in order to assure their existence since they are one of the more endangered species (I wonder how much you’d have to pay the wranglers on such a ranch). He also thinks everyone should have an oil well and natural gas fracking in their back yard …literally. It’s only patriotic …the least we can do, and the way to get off foreign oil.
And don’t miss “Should Water be Privatized? Yes”. A must read.

These are the “experts” and their “thinking” that influences national policy on resources, including our fish. Read Donald R. Leal’s (PERC’s Dir of Research) an MS in Statistics (which more than qualifies him to write treatises on the fisheries?) Fencing The Fishery: A Primer On Ending The Race For Fish, this is a cute little PERC booklet that is a glossary of almost all the bogus ITQ/Catch Share talking points. Donald works “…in collaboration with the Environmental Defense and Reason Foundation” —surprise, surprise.

On a larger scale NOAA/EDF/PERC/OCEANA etc, are all cogs in the corporate oligarchs promulgating more of this same ol’ Milton Friedman deregulated free-market capitalization, Privatization, Globalization, Wall Street, IMF, World Bank, CRAP that has devastated the World economy, —not to mention it’s inhabitants.

Here are some telling articles on Catch Shares/ITQ’s from Denmark, Iceland, and New Zealand. The Danish article is a factual account of what happens to fishing communities when the fishing industry through commoditization and market capitalization is tied directly to the mercurial (at best) and corrupt and predatory (at worst) financial industry.

The Icelandic article, I think, points to a similar issue, and what might be the result of a fish oligarchy or control by a few due to consolidation. The New Zealand articles are about the result of a free-for-all international market capitalization of one nation’s small independent fishermen’s fish resource; and another from New Zealand on the effects of consolidation on the safety of a fishery run by corporate mentality.

Iceland is in the process of trying to “redistribute” fish quota. See: Fishing News International June, 2010, Issue 6, p14 & 15 “Icelandic Quota Debate”. (This is a valuable publication, —can see how the rest of the world fishes, and see first hand the results of ITQ’s http://www.intrafish.com.) I’ll summarize some of the salient points from the Icelandic article below.

Olina Thorvardardottir a member of the Icelandic Parliament who represents the Westfjords where the fishing industry has been in decline for the last 20 years (Iceland instituted ITQ’s in 1983) is quoted saying in reference to the largest quota holding companies: “They were given these quotas in 1983 and have managed to build up debts and mortgage uncaught fish. The way they have treated these rights is a scandal. Who gave them license to mortgage a natural resource?”

She is referring to the fact that in her district, of the 20 or so large (some would say bloated) fish companies, each with several large vessels (125′ plus), only 40% are well run, the other 30% are badly in need of help and 30% are beyond saving.

The article goes on paraphrasing her, ‘She said that the constant mantra of calls for improved efficiency [sound familiar?] has seen the industry rationalise itself into a smaller number of larger companies, and fewer and larger vessels —but this has serious repercussions for Iceland’s coastal communities.’

She understands the scam of collecting “rent” from the fisheries and says. “This is a long overdue reorganisation of a closed and far from transparent system of rentals in which one group has the privilege of being able to profit from fishing rights that they aren’t required to exploit themselves [by actually fishing], but which others badly need [the tenant fishermen].”
(Inserts in brackets are mine).

This proposed redistribution of quota is to take place over a twenty year span. They are trying to get the toothpaste back into the tube after 27 years of “Quotas”.

Clearly any fishing business can be mismanaged and get into trouble no matter what management scheme is in play; the point is however, when a resource or industry is in the hands of a “few” (i.e., after consolidation), there is no resilience. If, for instance, the “few” CEO’s decide to go for the short profit and leverage out their quotas’ futures, then go bust and lean back on the “too big to fail” dike of government subsidies; or as in the case of the Danish and New Zealand situations, if the over capitalized quotas are tied directly to the unpredictable world financial markets, the entire fishing industry, the involved fishermen and their communities then become vulnerable pawns to the wiles of the international globalized casino financial scams. On the other hand if the resource is left in the hands of thousands of small family businesses, there might not be as much “efficiency”, but it would sure be a lot safer and far more “profitable” in actual lived terms.

Why did we even allow these catch shares to be seriously considered for US fisheries? Catch shares are a scam. They are nothing more than an outright theft of a vital resource held in public trust.

Danish and New Zealand articles are copied and linked below.

Home » News » ITQs may be straw that broke the camel’s back for Danish fishing hamlet
ITQs may be straw that broke the camel’s back for Danish fishing hamlet
Published: 23/06/2010
A whole Danish fishing community that went for ITQs now risks to be wiped out after the local bank collapsed.

When Danish fishing quotas were made transferable in 2007, many fishermen on north-western Jutland cashed in, sold their boats and whole communities moved on to other ways of making a living.
In the village of Thorup Strand, however, 20 fishermen formed a co-operative, mustered support from a local bank and bought fishing quota for a total of 6 million euros. Making it possible for youngsters as well to enter the trade without taking massive bank loans, the co-operative then rented out quotas to the members.
The future for the fishing community of Thorup Strand looked bright until the global financial crisis brought the local bank to its knees, then broke it. The Government took over the collapsed bank, but only in order to terminate all its activities.
Meanwhile, also in the wake of the financial crisis, the quota values had decreased by half.
In late May, the Government gave the Thorup Strand co-operative an ultimatum: by July 1, it had to secure a new bank loan, or else the fishing rights would be auctioned off. In effect, the fishermen say, that would mean the death of Thorup Strand as a fishing community.
With falling quota values and the economy still not recovered from the crisis, the task of enrolling new bank support is not easy, and the fishermen are hoping for a helping hand from their government, or other outside sources.
Popular with tourists, Thorup Strand is the only remaining fishing community in Denmark where boats are still hauled on to the beaches.
At a seminar on regionalisation in Brussels last year, an American fisherman, active on Cape Cod in Massachusetts, described how the system of Individually Transferable Quotas (ITQs) had, he said, failed dramatically and almost destroyed the fabric of local fishing communities there.
After big sector interests had bought up most of the rights, he and other fishermen in the community had seen as the only way to save their trade to form a consortium which worked much in the same way as the Danish cooperative.
this Danish article from World Fishing Today (.com) then FISH The Fisheries Secretariat, Denmark.http://www.fishsec.org/article.asp?CategoryID=1&ContextID=633

An article from New Zealand, a fishery living under catch shares since 1986, speaks about a 5000 signature petition by local fishermen urging Parliament to initiate an inquiry into the fact that almost half of their nation’s fish are harvested by foreign fishing companies due to foreigners’ ability to invest and buy quota shares.

http://topnews.net.nz/content/26304-petition-filed-against-fishing-industry-save-home-fishermen
Petition Filed Against Fishing Industry to Save Home Fishermen
Submitted by Amiri Halberg on Sat, 07/17/2010 – 16:16
• Economy
• Featured
• TNM
• New Zealand
A petition has been filed against the fishing industry of New Zealand having its link with foreign fishing Companies. The allegation was raised by the Service and Food Workers Union and fishing lobby group Keep it K-iwi, which has political support of Labour, Green and Maori parties. They have urged Parliament to initiate an enquiry in this context.
Around half of the commercial take of NZ is carried by the foreign charter vessels. In the 2008-09 fishing year, 30 of them wedged 198,000 tonnes, while 1142 domestic boats – including the inshore fleet – trapped 221,000 tonnes.
Union’s Assistant National Secretary, Neville Donaldson, and K-iwi spokesman Daren Coulston told that foreign fisherman are curbing the jobs of New Zealand’s people. They demanded a specified quota of region’s fisherman on boats entering NZ’s economic zone.
The association of nation’s fishing industry with that of foreign fishing Companies is posing a threat to the indigenous jobs, livelihood of fishers and sustainable fishing.
The supporters have already got signatures of 5,000 members on of fishing industry and the petition has still to close on August 1.
MP Maryan Street is of the view that the demanded quota accounts for 50% of New Zealanders, which would be an expensive and not a wise step. He said that there is nothing to conceal from the Parliament regarding the employment of foreign fishermen, as they don’t have enough man power for the same in their own region. He stated that enquiry into the fisheries is not a good option, indeed.

And here’s an example of how consolidation into large companies, a result of transferrable quotas, “…improves safety for fishermen at sea”:

Boat’s accident due to commercial pressure

Commercial pressure is said to influence boat’s fatal grounding as reported by the Transport Accident Investigation Commission (TAIC).
A Transport Accident Investigation Commission (TAIC) report states that a skipper, one of two men to die in a Bay of Plenty fishing boat accident in 2008, may have been influenced by commercial pressure when he anchored in unsafe conditions. in an another incident Sanford’s boat San Cuvier ran aground on rocks near Opotiki after dragging anchor during severe weather in the early hours of July 27, 2008.

In this accident both the skipper Rick Josephs, 38, and crewman Damien Wyatt, 35, died when the crew abandoned the ship. A TAIC report released today found that Josephs’ chosen anchorage in Awaawakino was not suitable for the conditions.

The report also found that Josephs’ decision to fish in the Bay of Plenty in the marginal weather might have been influenced by the fishing company’s remuneration system, in which the salary was directly proportional to the amount of fish caught. It is mentioned that this system places commercial pressure on skippers and crew to push the limits, commercial pressure from which Sanford stands to gain as well.

The TAIC said the pay system could potentially create a serious safety issue and recommended it be addressed by operators with guidance from Maritime New Zealand. The TAIC recommended a review of New Zealand and international maritime databases to grasp of how big a problem it was.